C.H. Robinson to acquire Phoenix International

Tuesday, September 25, 2012

C.H. Robinson, a dominant provider of truck brokerage and logistics services in the U.S. market, continued its international expansion Tuesday with the news that it plans to acquire Chicago-based international freight forwarder Phoenix International.
It is the biggest acquisition ever for C.H. Robinson, which is known for its focus on organic growth. The Minneapolis-based third-party logistics provider will pay $635 million for Phoenix, 90 percent of which will come from cash and the remainder from a revolving credit facility to be established with a bank, officials said on an early morning conference call with analysts.
Phoenix is a large forwarder and non-vessel-operating common carrier that predominantly handles ocean imports to the United States from Asia. The deal, which is expected to close before the end of the year, would double C.H. Robinson's ocean freight capacity. Last year the $10 billion company moved 262,000 TEUs and Phoenix handled 250,000 TEUs. Of that amount, 180,000 TEUs were on the inbound transpacific trade lane, C.H. Robinson Chief Financial Officer Chad Lindbloom said during the conference call.
Phoenix had gross revenue of about $807 million during the fiscal year ended June 30. It's net revenue was about $161 million, with an adjusted operating income of $48 million, according to C.H. Robinson.
Ocean consolidation represents 60 percent of Phoenix's business. The rest of its revenue is evenly split between air freight consolidation and customs clearance services. Phoenix has 2,000 employees located in 76 offices in 15 countries.
C.H. Robinson Chief Executive Officer and Chairman John Wiehoff said on the teleconference that Phoenix overlaps Robinson's biggest trade lane to a large degree, but characterized the situation as positive because it gives C.H. Robinson the network scale and capability for such a high-volume region. C.H. Robinson has a bit more diversity in its geographic coverage and the size of the market are factors that eliminate any worries about canceling out opportunities in the transpacific, he said.
“Phoenix is
a high quality growth company that brings additional expertise and scale to a
key part of our long term growth strategy,” Wiehoff said in a statement. "Along with their proven track record of
success, Phoenix has strong customer and carrier relationships, a talented
management team and excellent people, and a performance-based company culture
that is very similar to Robinson’s.
“We see significant long-term opportunity in international
forwarding as global trade expands, scale and technology continue to become
more important, and shippers increasingly look to transportation providers to
provide global services. Together, Robinson and Phoenix will be in a strong
competitive position to capitalize on those growth opportunities and continue
expanding our market share,” he added.
Phoenix CEO Stephane Rambaud will lead C.H. Robinson's international division, Wiehoff told analysts. - Eric Kulisch